This summary is based on the fiscal 2006 earnings call conducted by Vodafone Group Plc (VOD) on May 29, 2007.
Chief Executive: Arun Sarin
CFO: Andy Halford
Key Investors Issues
- EPS loss narrowed to ₤9.84 pence a share compared to ₤35.01 pence a share last year.
- Net income loss narrowed to ₤5.3 billion from ₤21.8 billion last year.
- Revenue rose to ₤31.1 billion from ₤29.4 billion a year ago.
Fiscal Year 2006 Highlights
The company has strengthened customer base to over 200 million customers and it will add proportionate share of the 27 million Hutch customers.
- The company is driving organic growth by over 16%. Organic revenues grew by 4.3% to over ₤31 billion.
- Operating profit grew 4%, principally driven by Verizon Wireless.
- EPS growth of over 11% to ₤11.26 pence was driven materially by reduction in the share count.
- Free cash flow of ₤6.1 billion was lower than the previous year predominantly because of higher cash taxes, but well in excess of guidance.
The company grew revenues at 6.3% against a range of 5% to 6.5%.
This is after accounting for certain revenue recognition items, without which the company would have exceeded the top end of the range.
- Margins were down 90 basis points, in line with expectations.
- CapEx came in at the lower end of expectations from a mixture of cost savings and clear prioritization of investments.
- The company saw good underlying cash generation together with some one-off timing benefits it pushed above expectations.
In Europe, revenue growth continues to come from new customers, usage and data.
- The key negative forces are price declines of 15% to 20% and regulatory pressures.
- The net impact is a revenue growth with margins down year-on-year.
- EMAPA had several elements to it. The subsidiaries and joint ventures containing emerging markets businesses grew around 20% top line with stable margins.
- Verizon Wireless posted 18% revenue growth.
- Overall, EMAPA posted strong double-digit performance of 15% with robust margins.
- In Italy, underlying performance was strong. Bersani decree has changed the market dynamics and will negatively impact business on a going forward basis starting in 2007, 2008 despite the usage being up 10% year-on-year.
- In Germany, the company took some strong measures in response to competitive moves last October with the effect now coming through P&L. Germany is exhibiting strong data growth of 50%, outgoing voice growth of 36% is helping counter prices, which are falling to 28%.
- In the UK, the company launched a series tariff initiatives and refreshes such as free weekend and family plans. These initiatives have regained competitiveness, and revenue growth in the last quarter accelerated to 5% albeit a lower margin.
- In Spain, business had another great year with top line growth well into the double digits even after the impact of regulation.
In the last quarter, share of net ads was back above 40%, but now new competitors are entering the marketplace and the company expects this to become more competitive.
The company expects Europe to remain challenging, as the growth drivers will continue to be offset by pricing pressure and regulatory pressure.
Margins for the full year came in at 21% compared to the 12% when the company acquired the business in December 2005.
- Turkey continues perform ahead of expectations, including the first three months of the calendar year when the company added over a million new customers, and the company is estimating incremental market share there to be 55%.
- In South Africa, Vodacom continues to perform well. The company saw particular success in introducing new data products such as 3G broadband, which has resulted in data rising at 150% year-on-year.
- In Egypt, the company increased revenue market share further to 55%.
Verizon Wireless is a high performing business, growing in double digits in virtually every metric.
- Customers now exceed ₤60 million and the company is performing strongly in retail.
- Verizon Wireless achieved a 30% share of net additions in the first quarter and has a market leading churn in contract of about 11%.
- Revenues are growing at 18%.
- ARPU is expanding, driven by data growth of over 100% and at the same time margins have been expanding over the last 12 months.
Revenue stimulation in Europe is where core focus remains in terms of driving minutes from fixed to mobile.
